340B Reimbursement Changes Require Pharmacy Action

Badges? We ain’t got no Badges! We don’t need no stinking Badges!

Apologies in advance for using classic Hollywood lines for section headings today, but it seemed the only way to keep this topic fun!

Starting off with the above classic quote from ‘Treasure of the Sierra Madre”. In case you are one of those unfortunate enough to not have seen this 1948 classic (rated #36 in all time movie greats), there is a scene where Dobbs, the old prospector, is confronted by a gang of Bandits claiming to be Federales. Dobbs asks the Bandit Leader Gold Hat to show him their badges. In a fit of fury, Gold Hat utters the classic repartee’ (above). And then the bandits shoot Dobbs. Which punctuated their angst quite effectively. Obviously the Bandits were antisocial types not dissimilar to Maynard G. Krebs (ask Marney Wilkerson about Maynard G. and the word ‘work’). At any rate, the quote seems appropriate with this significant change in rules.

Keeping in trend with classic exchanges, and moving on to Abbott and Costello’s famous exchange noted for extreme confusion in communication:

Who’s on First?

Things are a little confusing about potential changes to Medicaid (CMS) and Medicaid Managed Care (MCO) reimbursement. We’ve waited for clarification since Medicaid sent out a notice of intent to reimburse at the lesser of Actual Acquisition Cost or a 340B Ceiling cost plus a dispensing fee back in February 2016. That notice is titled: 42 CFR, Part 447: Medicaid Program Covered Outpatient Drugs with final comments (CMS-2345-FC). Fun reading on a rainy Sunday afternoon, while watching Treasure of the Sierra Madres, of course.

The HRSA notice set a date of April 1, 2017 for implementation, but the States have until June 1st to submit their plan, which is formally called a State Plan Amendment (SPA). Wait, the plan can be submitted after the implementation date? Confusing? Read on about Hammurabi’s code (below).

Watt’s on Second?

So what does the wealth of confusing information mean to my hospital? Unfortunately, there is no single answer. When CMS originally published this change, comments went out asking that processes be standardized, and CMS responded “we do not believe it is appropriate for us to require states to use a particular process for identifying 340B drug claims.” CMS went on to say, “Rather, we encourage the establishment of state-specific systems and/or procedures that are effective at

excluding 340B drug claims and preventing duplicate discounts,” in their final ruling. This is bureaucratese for “Badges? We don’t need no stinkin’ badges!”

Since each state is deciding on its own what to do, each your Pharmacy needs to work closely with your Billing Office to determine what is needed in your specific state. The Billing Offices already have, or shortly will receive a communication from your State’s Health and Human Services Department regarding this issue. Be sure you act on it accordingly, and promptly.

Note that in some cases, retrospective audits of billing by your state may adjust past reimbursement (from April 1st and on) to ensure compliance with as-of-yet-unwritten rules. As an example, Texas filed their State Plan Amendment (SPA) with CMS on February 6th of this year. It sets a limit on acquisition cost as “HHSC reimburses a 340B covered entity for a 340B covered outpatient drug purchased through the 340B program and dispensed to a patient of a 340B covered entity based on HHSC's estimate of the CMS 340B ceiling price.” It sets a dispensing fee on an elaborate formula based on the type of billing pharmacy. Then it mentions it will retrospectively audit and if needed, adjust payments for any entity not billing per the new ruling. Hammurabi would be proud.

And if you don’t know who Hammurabi is/was: He’s a Babylonian King credited with creating the first published rules, and he is known as the Father of Bureaucracy. Hammurabi published his Code on a ‘stele’ (pictured) in a public location. All people in Babylonia were expected to adhere to the code. Funny thing was, almost no one in Babylonia could read. The ‘Stele’ is displayed at the Louvre in Paris. Drop by one day to see it.

Left Field is Played by Why?

As soon as you get a copy of your state’s communication on this change, please email a copy to your 340B Consultant. We may already have it, but we’re tracking these communications as they go out. Over the next few weeks we hope to have a composite listing of all State Plan Amendments (SPA) and will work closely with each of our teams to help understand the changes as they affect your facility.

Centerfield is Because?

How soon should you act? Right away: remember that this went into effect on April 1st, even though your state may not have filed anything yet (the deadline for states is June 1, 2017). If you’re wondering how a rule can be put into effect before it’s been approved, ask your state CMS office, and while you are at it, ask to see their badges.

What do I need to do?

This blog is intentionally superficial and intended to alert our Directors of substantial changes in how Medicaid and Medicaid Managed Care reimburses 340B accounts. Bruce Thompson sent out a detailed notice about the changes a week ago. Some people admitted to placing this on a back burner, but this requires rapid attention. Contact your 340B Consultant if you need a fresh copy of the details of these changes, and plan to work closely with your billing office manager on ensuring your 340B bills for Medicaid and MCO’s are processed properly. Note that in most states this does not apply to CE’s that CARVE-OUT, but check to be sure your state is not planning to mandate a Carve-In!

And the Shortstop is called?

You’re going to have to look up what Abbott and Costello called the Shortstop. I’m sure they toned it down from what they said on stage to pass the Television Censors. If this is all a bit more confusing than you care to deal with right now, email or call your 340B Consultant for more assistance. We’re working diligently to complete the Nation-wide database, and as mentioned above, hope to have more specific answers for everyone soon!